MD economy retreats, as construction, retail sales soften

The RESI Maryland Leading Index fell 0.7 percent in July. A big drop off in construction activity, soft consumer sales, slowing help wanted ads, weak manufacturing and an increase in welfare activity were all negative factors.

Slight improvements in airport activity and unemployment claims were positive components to the index. Despite the monthly decline, the index was up 2 percent from last July indicating continued expansion of Maryland's economy over the past year.

Employment

The state's job market expanded at a 0.2 percent rate in July, with 5,649 net new jobs added. Even more impressive, 60,000 net new jobs were created since last July, representing the largest 12- month job gain Maryland has recorded since September 2000.

Maryland's unemployment rate stood at 4.4 percent in July, up 0.2 percent from June and 0.1 percent from last July. Although the state's jobless rate has risen to its highest level since November 2003, the increase is the result of labor force expansion rather than employment losses.

Initial unemployment claims dropped to their lowest level in four years, declining 13.5 percent to 16,130. However, total unemployment benefits rose 4 percent for the month. Benefits still remain 8.6 percent below the level paid 12 months ago.

Sales tax receipts

Sales tax receipts declined in July, extending this year's pattern of alternating dips and jumps in spending. Receipts for durable goods, items intended to last three years or longer, dropped 2.9 percent for the month, but were 4.3 percent above receipts recorded last July. Receipts for general merchandise, apparel and furniture (GAF) declined 1.5 percent in July. These receipts, however, have increased 5.3 percent over the past 12 months.

Passenger traffic through BWI Airport increased 3.2 percent in July to its highest level since March. Passenger traffic is down 1.4 percent from one year ago.

Home sales

Home sales in Maryland dropped to their lowest level in just over a year in July, dipping 5.9 percent for the month. Twelve-month home sales declined 1.2 percent, the first drop the state has recorded since January 2004. Pending home sales dropped slightly by 0.3 percent for the month. Over the year, however, pending sales have jumped 11.1 percent.

Homes available for sale appear to have bottomed out at the beginning of the year and are now on the rise. Inventories grew 3.9 percent in July to 17,346, the highest level Maryland has reported since February 2002.

Home prices continue to represent the strongest component of Maryland's housing market. Average home sales prices increased to $343,744, an increase of 2.7 percent for the month; prices are up 21.9 percent from last July. Maryland's median home sales price increased to $271,862, representing an increase of 3.1 percent for the month and 21.9 percent over the past year.

Building permit data fell sharply in July. The number of permits declined 28.1 percent for the month and was down 9.9 percent since last July. Permit values fell 30 percent in July yet were just 0.2 percent above values from 12 months prior.

Despite falling in July, new and used car sales remain robust compared to sales recorded last July. New car sales declined 0.3 percent for the month, but increased 5.4 percent over the past year. Used car sales declined 6.3 percent in July, but increased 1.1 percent over the last 12 months.

John Hopkins, an economist with RESI of Towson University, analyzes Maryland's economy every month for The Daily Record.

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